Economic fundamentals are forecast to improve, with job growth concentrated in full-time employment and the provincial population continuing to expand. Increased non-residential investment and consumer spending are expected to be accompanied by a slightly stronger global outlook in 2013, resulting in a modest pick-up in economic growth this year and next. Through the third quarter of 2012, net international migration has been higher than year-earlier levels and this is forecast to continue adding to the province’s population, particularly in the larger urban centres. The interprovincial outflow recorded in 2012 is forecast to turn around in 2013 as job opportunities draw more people to the west, which is also expected to continue over the forecast horizon, further supporting the housing market in 2014.

Reflecting better economic prospects in British Columbia going forward, the outlook for the province’s housing market in 2013 is for an increase in existing home sales and new home construction when compared to last year. However, both sales and new construction are forecast to remain below their ten-year averages. Home prices are expected to remain essentially stable in 2013. Expected stronger economic and employment growth in 2014 will lead to higher levels of resale activity and new home construction, as well as modest home price growth next year in British Columbia. Both single-detached as well as multi-family construction levels are expected to increase in 2013 and 2014.

While the housing market in British Columbia is forecast to benefit from an improving economic outlook over the forecast horizon, risks to the outlook are reflected in a range of forecasts. Following a level of 27,465 total housing starts in 2012, the forecast for total housing starts in 2013 ranges from 27,200 units to 30,400 units. In 2014, the forecast ranges from 27,200 to 33,800 units.

In Detail

Single Starts:

Housing starts are forecast to rise to 9,100 units in 2013 and to 9,500 in 2014, compared to 8,333 units in 20129. However, housing starts in British Columbia will remain below the tenyear average of roughly 11,700 units. In the province’s larger housing markets of Vancouver and Victoria, densification, the high cost of land, and mobility are some of the factors contributing to the shift away from single-detached construction toward more multi-family construction. Together, these two markets accounted for threequarters of the province’s total housing starts in 2012, and 88 per cent of multifamily housing starts.

Multiple Starts:

Multi-family housing starts are forecast to reach 19,700 units in 2013 and increase further to 21,000 units in 2014, compared to 19,132 units in 2012. Housing starts of apartment condominiums, row and semi-detached homes are forecast to rebound in early 2013, following a slowdown in the fourth quarter of 2012. This upward trend is expected to continue into 2014. Building permits have been issued for several largescale projects in the Vancouver CMA and, with site preparations currently underway, these projects are expected to start in early 2013.

Resales:

Resale transactions in 2013 are expected to reach 73,000 units, up from 67,637 sales in 2012. In 2014, resale transactions will increase further to 79,500 sales. Despite these gains, the level of sales over the forecast horizon will remain below the ten-year average of roughly 86,500 units. While employment and population growth would suggest a higher level of resale activity than projected, a number of factors are dampening sales. These factors include a reduced inventory of homes for sale as some sellers choose to let their listings expire rather than accept lower prices, and buyers take a wait-and-see attitude as existing home prices moderate in the Vancouver and Victoria housing markets.

Prices:

Compared to an average MLS®price of $514,836 in 2012, existing home prices are forecast to essentially hold steady in 2013 at $511,200, before rising to $524,000 in 2014. On a quarterly basis, resale home prices are forecast to grow at a rate consistent with overall consumer price inflation.

Ninety-five per cent of people looking at home listings online view the first photo — usually an exterior shot — for 20 seconds. After that, it’s cursory glances at the other material, according to research from the Institute for Behavioral and Experimental Real Estate at Old Dominion University in Norfolk, Virginia.

“Without an eye-catching photo, the battle is lost before it begins,” Professional Michael Seiler told the Wall Street Journal. “You have to grab people’s attention within two seconds. Do it the way a billboard does.”

To conduct the study, Seiler and his team tracked the eye movements of 45 people who each viewed 10 listings with six photos, looking at the time spent viewing each online feature and the number of times their eyes stopped at a certain element.

Chart via the Wall Street Journal

Study highlights courtesy the Wall Street Journal:

Following the home exterior image, 76% of people viewed the property description second

Only 41.5% of participants even bothered to read real estate agents’ remarks, which the Journal notes “can be a turnoff if they contain all-capital text, hyped-up adjectives and brand names”

Overall, online homebuyers spend about 60% of their time on photos, 20% on the property description and 20% on the real-estate agents’ remarks section

The study also found that as browsers click through listings, their interest wanes.

“People have respondent fatigue. After a while, you get lost in a sea of homes,” Seiler told the Journal.

The Real Estate Board of Greater Vancouver is urging all BC property owners and buyers to put the provincial property transfer tax on the hot seat during the upcoming provincial election.

The province introduced the PTT 26 years ago. It was structured to add 1% on the first $200,000 of the purchase price, and 2% on the balance. At that time, only 5% of Metro Vancouver houses sold for $200,000 or more.

Today only 4% of homes sell for under $200,000, yet the PPT hasn’t changed, the Board notes.

The PTT adds $10,000 to a $600,000 home and it is paid each time a property changes hands. When a developer buys raw land, the developer pays the PTT. When a builder buys lots from the developer, the builder pays the PTT. When a home buyer buys a home from the builder, the buyer pays the PTT. Every time that same home is sold, the next buyer pays the PTT.

“It is a cascading tax that never really ends,” said one Board official.

The Board argues it is time the government looked at changing the PPT, perhaps setting a new price ceiling or exempting properties below $400,000, a step toward making homes more affordable.